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Removal Of Protectionism, Foreign Investment And Welfare In A Model Of Informal Sector

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Author Info
Sarbajit Chaudhuri (Dept. of Economics, Calcutta University)
Ujjaini Mukherjee (Dept. of Economics, Calcutta University)

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Abstract

The paper develops a three-sector general equilibrium model with two informal sectors with complete mobility of labour between these sectors and with a positive relationship between wage income and labour's efficiency to show that the results relating to foreign capital inflow and removal of protectionism may be counterintuitive to the conventional wisdom. The paper is also devoted to explain why some developing countries implement tariff reforms very slowly compared to others, even after formally choosing free trade as their development strategies, in a more general fashion than the existing tariff-jumping theory.

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Paper provided by EconWPA in its series International Trade with number 0511009.

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Length: 21 pages
Date of creation: 11 Nov 2005
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Handle: RePEc:wpa:wuwpit:0511009

Note: Type of Document - pdf; pages: 21
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Web page: http://129.3.20.41

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Related research
Keywords: Foreign capital inflow tariff reduction mobility of labour wage efficiency hypothesis tariff-jumping theory

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Find related papers by JEL classification:
F10 - International Economics - - Trade - - - General
F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
O17 - Economic Development, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Beladi, Hamid & Marjit, Sugata, 1992. "Foreign capital, unemployment and national welfare," Japan and the World Economy, Elsevier, vol. 4(4), pages 311-317, December. [Downloadable!] (restricted)
  2. Stiglitz, Joseph E, 1976. "The Efficiency Wage Hypothesis, Surplus Labour, and the Distribution of Income in L.D.C.s," Oxford Economic Papers, Oxford University Press, vol. 28(2), pages 185-207, July. [Downloadable!] (restricted)
  3. Brecher, Richard A. & Diaz Alejandro, Carlos F., 1977. "Tariffs, foreign capital and immiserizing growth," Journal of International Economics, Elsevier, vol. 7(4), pages 317-322, November. [Downloadable!] (restricted)
  4. Dasgupta, Partha & Ray, Debraj, 1986. "Inequality as a Determinant of Malnutrition and Unemployment: Theory," Economic Journal, Royal Economic Society, vol. 96(384), pages 1011-34, December. [Downloadable!] (restricted)
  5. Khan, M. Ali, 1982. "Tariffs, foreign capital and immiserizing growth with urban unemployment and specific factors of production," Journal of Development Economics, Elsevier, vol. 10(2), pages 245-256, April. [Downloadable!] (restricted)
  6. Motta, Massimo, 1992. "Multinational firms and the tariff-jumping argument : A game theoretic analysis with some unconventional conclusions," European Economic Review, Elsevier, vol. 36(8), pages 1557-1571, December. [Downloadable!] (restricted)
  7. Chandra, Vandana & Khan, M Ali, 1993. "Foreign Investment in the Presence of an Informal Sector," Economica, London School of Economics and Political Science, vol. 60(237), pages 79-103, February. [Downloadable!] (restricted)
  8. Beladi, H. & Marjit, S., 1992. "Foreign Capital and Protectionism," RCER Working Papers 310, University of Rochester - Center for Economic Research (RCER).
  9. Grinols, Earl L, 1991. "Unemployment and Foreign Capital: The Relative Opportunity Costs of Domestic Labour and Welfare," Economica, London School of Economics and Political Science, vol. 58(229), pages 107-21, February. [Downloadable!] (restricted)
  10. Hamid Beladi & Sugata Marjit, 1992. "Foreign Capital and Protectionism," Canadian Journal of Economics, Canadian Economics Association, vol. 25(1), pages 233-38, February. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Khan, M. Ali Khan, 2007. "The Harris-Todaro Hypothesis," MPRA Paper 2201, University Library of Munich, Germany. [Downloadable!]
  2. Sarbajit Chaudhuri, 2005. "Tariff Structure In A Small Open Economy: A Theoretical Analysis," International Trade 0511006, EconWPA. [Downloadable!]
  3. Sarbajit Chaudhuri, 2005. "Direct Foreign Investment In A Small Open Economy And Global Trade Liberalization In Agriculture: A Note," International Trade 0510012, EconWPA. [Downloadable!]
  4. Kausik Gupta & Tania Basu, 2004. "Foreign Capital Inflow, Skilled-Unskilled Wage Gap, and Welfare in the Presence of the Informal Sector," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 43(2), pages 125-147. [Downloadable!]
  5. Chaudhuri, Sarbajit & Banerjee, Dibyendu, 2006. "Economic Liberalization and Informal Wage in a Small Open Economy: Does Capital Mobility count?," MPRA Paper 1353, University Library of Munich, Germany. [Downloadable!]
  6. Sarbajit Chaudhuri, 2001. "Foreign Capital Inflow, Non-traded Intermediary, Urban Unemployment, and Welfare in a Small Open Economy: A Theoretical Analysis," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 40(3), pages 225-235. [Downloadable!]
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